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Salient. Victoria University Student Newspaper. [Volume 39, Number 19, 1976.]

Economy in a Mess

Economy in a Mess

The reason why we feared the Budget, and one reason Muldoon was elected last November, is a simple one. The economy is in a mess. Mess with a capital M. There are five major aspects of the Mess (Muldoon identified on Thursday night):
1.record and growing rates of inflation
2.a massive and increasing Government deficit of expenses over income
3.a massive external deficit (we buy more goods overseas than we can sell there)
4.the highest level of unemployment since 1940.
5.A crisis in capital accumulation.

To my mind, the last of these is the most important. Capitalism can easily survive with any of the others, but if not enough money is put into new machines and equipment, then the system starts shaking a bit. And that is precisely what is happening in New Zealand.

In agriculture, stock numbers and output have not risen significantly over their 1965 levels. The investment funds available have not gone into machinery for local industry either. Much has gone into superfluous export-orientated industries, who import their machinery and mateirals and export their products. One could be forgiven for thinking that this has little to do with the development of this country.

The other avenue for firms profits has been in nonproductive uses. Into expensive beach speculations for example. Or, as Lincoln Laidlaw, the President of the Manufacturers' Federation, said into takeaway food bars and massage parlors. Whatever the quality of such services, they don't have much influence on the future productivity of this country.

This is not to deny that the other issues are important (tho' I see them slightly differently to Muldoon) but, as can be seen from the Budget measures, this is the central question. The crisis in capital accumulation.

The high unemployment figures are directly related to this - obviously if you're not building new machines then there are no jobs to make these machines, nor jobs to work with them. The other three are more independent, but all five combine to agree. The economy is in a Mess.